How to Start an Emergency Fund

August 10, 2018

When it comes to unforeseen emergencies, the best defense is a fund established specifically for unplanned events. An emergency fund can help you stay financially afloat in times of stress. Whether it’s a job loss, natural disaster, or unexpected expenses, an emergency fund will save you from accruing too much debt. Watch the video below to see how to start an emergency fund.

How to Start an Emergency Fund

How Much Should I Save?

Aim to save six to nine months’ worth of critical living expenses, such as:

Bills (mortgage, rent, etc.)

Food

Utilities

Insurance

Transportation

Child Care

Minimum Payments (on credit or loans)

Where Should I Save It?

Once you’ve decided how much you need to save, set your funds aside in a separate account other than regular savings. Using different accounts helps to avoid dipping into your emergency fund for non-emergency spending. Save your contributions in an account that is not easily accessible and earns interest.

There are a number of scenarios that could leave you needing your emergency fund. From job loss to car repairs to medical expenses or a natural disaster, you never know when there will be an emergency. Be prepared! And remember to only use your emergency fund when it’s absolutely necessary. Here are some other tips for what to do during a financial emergency.

About Blog

Talking Cents was created by the staff of the nonprofit organization, American Consumer Credit Counseling (ACCC). Not satisfied with providing credit counseling, debt management, and financial education alone, these renegade employees took to the blogosphere in the hopes of helping not only their current clients, but the rest of the world at large to tackle more of the topics affecting people’s everyday financial lives.